Widows left in the lurch

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The Independent Online
NOBODY could possibly be in favour of depriving widows of the fruits of building society conversions just because they were the second-named person on a joint account.

But that is precisely the position the Cheltenham & Gloucester Building Society appears to have taken.

The ridiculous mess stems from a bit of grisly legislation that ties building societies in very neat knots.

As a result of this Act, the C&G had to change its plans to distribute the £1.8bn being paid to take it over by Lloyds Bank. Payments can only go to members of two years' standing. It realised that the court decision that forced it down this pathway would result in unfair treatment for widows, but was powerless to manoeuvre around the pitfall.

With a joint account, only the first-named person is the member, with voting rights and the right to any spoils in a takeover.

Building society accounts can be transferred on death, but the new member will not have a two-year track record since ``and Mrs" does not count for anything in building society land.

So you get the situation where widows will miss out on the payments of £500 per account plus more than 10 per cent of account balances on Lloyds Bank's takeover of the C&G.

Members are due to vote on 31 March on proposals drawn up with the current Act in mind. As chief executive Andrew Longhurst put it: "We are in a plane over the seas and coming in to land. It's too late to change everything now."

But the Government is soft-hearted and not against taking steps to win popularity at zero cost. So it is considering tinkering with the legislation.

It should try to get something sorted out so that rights can be transferred on death in time to catch the Halifax/Leeds conversion, which is due sometime next year. However, throwing a spanner in the C&G works - however worthy the cause - would look rather desperate, and might jeopardise the whole deal.

THE Government's use of retrospective legislation to swipe a double helping of tax from building societies when the tax collection system was changed in 1986 has landed it in the European Court of Human Rights.

Three societies are claiming their money back - the Leeds £57m, National & Provincial £15m and Yorkshire £9m. And on Friday, the Court said the Government had a case to answer and would have to do so unless it came to a friendly settlement.

The Government whacked legislation on to the books after the Woolwich went to the House of Lords and won £91m in overpaid tax.

That should be a warning of the dangers of playing about with retrospective legislation. The lesson should be to get it right first time, or put it right when the heat is off.

NETTIES used to be a term to describe nerds who liked playing about with computers and surfing the international information super-highways in search of . . . who knows what. The journey seemed to be the point of the exercise.

But it seems we are on the verge on a new era, with financial companies spying yet another way of selling their wares.

Barclaycard has put information on the Net, and Access is considering following suit. And First Mortgage Securities is puting information about mortgages on it.

Cruisers can ask Barclaycard and FMS for more information, but the next stage will be transacting financial business over the screens.

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